Comment author:moridinamael
16 September 2014 04:43:53PM
29 points
[-]
[Please read the OP before voting. Special voting rules apply.]
Buying a lottery ticket every now and then is not irrational. Unless you have thoroughly optimized the conversion of every dollar you own into utility-yielding investments and expenses, the exposure to large positive tail risk netted by spending a few dollars on lottery tickets can still be rational.
Phrased another way, when you buy a lottery ticket you aren't buying an investment, you're buying a possibility that is not available otherwise.
Comment author:Apoplast
22 September 2014 08:01:09PM
0 points
[-]
I'll put this here because I wish to provide a different perspective without getting bogged down in probabilistic thinking. To say buying a lottery ticket is irrational might be correct if you consider winning the lottery or not to be the only real outcome of such a purchase. The fact is, however, that buying a lottery ticket provides entertainment. You pay a relatively small sum of money to play, until results day, with the fantasy of receiving an enormous amount of money. Entertainment is utility, as far as I'm concerned. Obviously the more money you spend on the lottery, the less justifiable this entertainment is, because as others have pointed out, buying a small number of more tickets doesn't appreciably change the probability of winning. Just one ticket, however, and you're one stroke of luck away from enormous wealth; the enjoyment of knowing that alone can be worth a dollar.
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[Please read the OP before voting. Special voting rules apply.]
Buying a lottery ticket every now and then is not irrational. Unless you have thoroughly optimized the conversion of every dollar you own into utility-yielding investments and expenses, the exposure to large positive tail risk netted by spending a few dollars on lottery tickets can still be rational.
Phrased another way, when you buy a lottery ticket you aren't buying an investment, you're buying a possibility that is not available otherwise.
I'll put this here because I wish to provide a different perspective without getting bogged down in probabilistic thinking. To say buying a lottery ticket is irrational might be correct if you consider winning the lottery or not to be the only real outcome of such a purchase. The fact is, however, that buying a lottery ticket provides entertainment. You pay a relatively small sum of money to play, until results day, with the fantasy of receiving an enormous amount of money. Entertainment is utility, as far as I'm concerned. Obviously the more money you spend on the lottery, the less justifiable this entertainment is, because as others have pointed out, buying a small number of more tickets doesn't appreciably change the probability of winning. Just one ticket, however, and you're one stroke of luck away from enormous wealth; the enjoyment of knowing that alone can be worth a dollar.